Contango and backwardation: reading the forward curve as a buyer
The forward curve shows today's prices for delivery in future months. Its shape tells a buyer whether waiting is likely to cost or save money.
Contango
Later months cost more than today. Waiting to book usually costs more, so earlier cover is favoured.
Backwardation
Later months are cheaper than today. The market expects prices to ease, so deferred cover can be cheaper.
- Cover only urgent near-term volume
- Layer the rest
Flat curve
No strong signal — let your coverage gap and supplier position decide.
Decision support for procurement, not investment or trading advice. Market conditions change; check current data before booking.